Judge approves Knowlton's plan

05.04.05

A U.S. Bankruptcy Court has approved a reorganization plan for Watertown, NY-based Knowlton Specialty Papers Inc. that will allow the papermaker to pay off all of its creditors in full. The company has also settled a claim with insurance companies stemming from a June 2002 explosion at the mill, with the recovered money enabling Knowlton to pay off creditors significantly sooner than planned.

The company has struggled since a large explosion at one of its Mill Street buildings killed a longtime employee and injured six other workers. Knowlton filed a state Supreme Court lawsuit against the Chubb Group of Insurance Companies and Royal Surplus Lines of Insurance Co. in March 2003, claiming it was owed $7.5 million for damages suffered in the blast, an event that the insurers argued was not covered.

While that matter remained unresolved, four Knowlton creditors forced the company into involuntary Chapter 7 liquidation bankruptcy in March 2004. The case was converted to Chapter 11 reorganization the following month.